Economist Joe LaVorgna at Deutsche Bank says "without a meaningful pickup in housing demand, approximately 1 million more layoffs in the residential construction/contractor industry may be needed in order to establish equilibrium." He calls for -325k overall Jun payrolls.

The Nasdaq continues to outperform its counterparts in what has become a sluggish, summer Friday afternoon of trade.
Despite broad weakness in the U.S., the Dow Jones Global Total Stock Market Index is up a healthy 0.8%. Most of that gain comes from gains that were registered in Asia, where Japan's Nikkei climbed 0.8% and Hong Kong's Hang Seng closed 1.8% higher.
The major European indices all finished lower. In South America, Brazil's Bovespa is currently up 0.5%.

The stock market has pared some of its losses. Weakness, though not severe, is still widespread.
All 10 major sectors in the S&P 500 are trading with losses. Their declines range from a fractional loss in the tech sector to a 1.0% loss in the energy sector. Treasuries are having a relatively quiet, but positive session of their own. The 10-year Note is steadily holding on to a modest gain of 7 ticks, which has the yield on the 10-year Note at 3.51%.

Currency strategist Marc Chandler of BBH reminds that the Tankan report is set for release July 1. He says "the next reading should show the first improvement in 3 years. The consensus is for sentiment among large mfg to improve to around -45 from -58. Improvement is also expected for large non-manufacturers. If there was an improvement insmall businesses, it is likely to be more modest."

Testing the $1.4100 area of morning highs amid very thin conditions. Pair probing earlier highs atop $1.4100 that invoked selling by Asian and mid-east accounts. Residual offers remain at $1.4110, further at $1.4140/50.

The Nasdaq Composite has made its way into positive ground, thanks to strength in large-cap tech outfits. Shares of Apple (AAPL 142.04, +2.18), Research in Motion (RIMM 70.91, +1.61), and Amazon.com (AMZN 83.89, +1.69) are all trading with enviable gains.
Despite strength among large-cap tech stocks, many other tech issues are under pressure and, in turn, are diffusing gains in the broader tech sector. As a group, technology stocks are up an unimpressive 0.1%.

The dollar fell against most of its major counterparts after China repeated its call for a supranational currency “delinked” from sovereign nations.
The greenback headed for its biggest weekly loss against the euro in a month after the People’s Bank of China said the International Monetary Fund should manage more of members’ foreign-exchange reserves. A rally in Treasuries this week pushed the yield on the benchmark 10-year note down the most since March, lowering expected returns.
“The dollar’s status as a reserve currency is being questioned,” said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. “Relative yield momentum is abating. There are reasons to sell the dollar.”
The greenback declined 0.6 percent to $1.4069 per euro from $1.3988 yesterday, extending its loss this week to 0.9 percent. The greenback fell 0.8 percent to 95.23 yen from 95.95 and was poised for a 1.1 percent weekly decline, its third consecutive drop.
The yen dropped versus the euro on speculation Japanese investors are adding to their purchases of foreign securities.
“The global environment for investors’ risk taking is gradually improving,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The bias is for the yen to be sold, especially as trust funds are being launched to attract bonuses.”
The U.S. Treasury sold $104 billion of two-, five- and seven-year notes this week and received more bids relative to the amount offered than at the previous auctions of the securities. Indirect bidders, which include foreign central banks, bought 67.2 percent of the $27 billion of seven-year debt sold yesterday.
The government’s 10-year security headed for its third weekly decrease, the longest stretch of drops since December, as investors bet the Federal Reserve will keep interest rates close to zero for the rest of the year. Policy makers said on June 24 inflation “will remain subdued for some time” and that the economy warrants an “extended period” of low rates.
The yield on 10-year notes fell 0.25 percentage point this week to 3.53 percent. The rate touched 3.49 percent today, the lowest level since June 1.
“Gains in stocks are pumping capital into markets,” said Masaki Fukui, a senior market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender by assets. “The recent risk aversion strengthened the dollar as a refuge, but as risk appetite rebounds, higher- yielding currencies seem to be benefiting.”

The major indices trade flat or with modest losses. Energy (-1.1%) continues to be the worst performing sector. In Europe, the major bourses all closed lower, with losses ranging from 0.3% to 1.1%.

Stocks were mixed at Friday's open as investors mulled a government report that showed personal income surged -- but so did savings, as investors opted to sit out the recession rather than spend.
The overall tone, though, remains rather downbeat. All 10 major sectors in the S&P 500 are in the red and 23 of the 30 Dow components are trading with losses.

EUR/GBP declined ahead of London fixing, noting the dip to stg0.8515 area. Cable lifted over $1.6500, while EUR/GBP tries to recover, currently holding near stg0.8525.

The July 4 Independence Day holiday in the US falls on a Saturday this year but will be observed with market and Federal holidays on Friday July 3 when stocks, bonds and futures markets will be closed. Ahead of that holiday, markets will observe normal trading sessions on Thursday July 2, the day that the US payrolls report will be released.

EUR/USD easing lower with backdrop including weaker US stocks and longs fixing. Euro trading at $1.4065 area currently, bids expected $1.4020/25.

Gold has had a relatively large sell-off heading into the afternoon fix, losing around $4 before finding some support near $941/oz. Weakness in the dollar has offered the yellow metal a boost throughout the day, but resistance was still seen ahead of the 21-day moving average (currently $948.47/oz), with the metal seeing the $938.05 - $948.48 range during the session

European equity bourses weaken Friday, falling into the red through midday. Oil stocks, which have been supporting the blue-chip indices through the morning, are generally flat now, as crude prices fell below the psychologically significant $70/bbl level. The mining sector has also turned to the negative, including Rio Tinto and Anglo American. Banks are holding firm however, with Deutsche Bank and BNP Paribas still leading gains after UBS upgraded their respective stock targets to E52 and E50.

EUR/USD is easing lower as the air lets out of the pair slightly after upbeat UMichigan data, euro-dollar slipping to $1.4065 area before steadying. Pair remains rangy, still above demand interest at $1.4025.

EUR/USD $1.4000, $1.3870
USD/JPY Y95.35, Y96.30, Y96.35, Y95.00, Y97.00
EUR/JPY Y136.00
AUD/USD $0.8140
USD/CAD C$1.1530, C$1.1600

Stocks were set for a flat start Friday, as investors reacted only briefly after the personal income report trounced expectations.

USD/JPY has skidded to fresh lows for the session around Y95.25 area as the greenback gets hit across the board and as US stock futures trade with a soft tone (Dow futures down 40). Pair on approach to earlier noted demand interest ahead of Y95.00 area with stops seen through Y94.90.

AUS/USD tested session highs near $0.8080/85 where stops were mentioned. Rate currently holds at $0.8050. Offers then seen into $0.8120, with expiry interest highlighted at $0.8140 for the NY cut.

EUR/USD eroding earlier noted supply atop $1.4100 area but meeting some "interesting" sellers above $1.4100, a trader says. Other chatter reporting French name as a conspicuous seller up here.

EUR/USD still probes resistance zone between $1.4100/10. Rate currently trades around $1.4097 after another challenge on $1.4100. A break of $1.4110 to open a move toward $1.4140/50.

Data:
06:45 France GDP (Q1) final Y/Y -3.2%
06:45 France GDP (Q1) final -1.2%
06:50 France Consumer confidence (June) -37
07:00 Germany Import prices excluding oil (May) Y/Y -4.7%
07:00 Germany Import prices (May) Y/Y -10.4%
07:00 Germany Import prices (May) 0.0%

The dollar fell, heading for its biggest weekly loss against the euro in a month, after China repeated its call for a “super-sovereign” currency and stocks in Europe and Asia rose.
The dollar extended losses after the People’s Bank of China, or PBOC, said the International Monetary Fund should manage part of members’ foreign-exchange reserves. The Dollar Index, which tracks the greenback against the currencies of six leading trading partners, fell below 80. China is the biggest foreign holder of U.S. Treasuries, with $763.5 billion in April.
People’s Bank Governor Zhou Xiaochuan in March urged the IMF to expand the functions of its unit of account and move toward a “super-sovereign reserve currency.” Russian President Dmitry Medvedev proposed on June 5 that nations use a mix of regional reserve currencies to reduce reliance on the dollar.
China called on the U.S. to guarantee the safety of its assets in March, when Premier Wen Jiabao said the nation was “worried” about its holdings of Treasuries.

EUR/USD the pair continued to strengthen the positions therefore the high in the field of $1,4100 has been reached

The dollar fell, heading for its biggest weekly loss against the euro in a month, after China repeated its call for a “super-sovereign” currency and stocks in Europe and Asia rose.
The dollar extended losses after the People’s Bank of China, or PBOC, said the International Monetary Fund should manage part of members’ foreign-exchange reserves. The Dollar Index, which tracks the greenback against the currencies of six leading trading partners, fell below 80.
“There may be signs here of tensions mounting between the PBOC’s economic concerns over China’s holdings of dollars and the Chinese government’s diplomatic reasons for doing so,” Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London, wrote in an e-mail.

Resistance 3: Y97.80
Resistance 2: Y97.20
Resistance 1: Y96.50
Current price: Y95.65
Support 1: Y95.60
Support 2: Y94.80
Support 3: Y93.80
COMMENTS: The pair comes nearer to a sessional minimum which is the nearest support (Y95,60). Below – at Y94.80 (Jun 23 lows). Break under will target May 22 lows on Y93.80. Resistance comes at Y96.50. Stronger level is near Friday’s highs on Y97.20. Break above will open the way to Y97.80.

Resistance 3:Chf1.1260
Resistance 2:Chf1.1150
Resistance 1:Chf1.1020
Current price: Chf 1.0865
Support 1:Chf1.0865
Support 2:Chf1.0820
Support 3:Chf1.0630
СOMMENTS: The pair continues to be corrected after recent growth. Strong resistance comes near Wednesday’s highs on Chf1.1020 (also 38.2% Fibo of Chf1.1720 - Chf1.0590 decline). Above the bullish momentum strengthens and opens the way to Chf1.1150 (50%). Further resistance comes at May 18 highs. Support comes at Chf1.0865 (today’s low), stronger one – on Chf1.0820 50%) and Chf1.0630 (Wednesday’s low).

Resistance 3:$1.6800
Resistance 2:$1.6660
Resistance 1:$1.6600
Current price: $1.6486
Support 1: $1.6360
Support 2: $1.6210
Support 3: $1.6100
COMMENTS: The sterling continues to update session high. Resistance comes at highs on $1.6600/10, then – at $1.6660. Stronger level is around $1.6800 (50% Fibo of $2.0144 - $1.3470 decline). Minor support is at today's lows on $1.6360. Stronger support is near $1.6210 (Tuesday’s low).

Resistance 3:$1.4330
Resistance 2:$1.4270
Resistance 1:$1.4150
Current price: $1.4027
Support 1:$1.3980
Support 2:$1.3880
Support 3:$1.3780
COMMENTS: The euro continues growth.The nearest resistance $1.4137/50 (today's high),ahead of $1.4270. Stronger level is June 03 high on $1.4330.The nearest support - $1.3980 (today's low), below - $1.3880 (yesterday's's low). The strong level is located on $1.3780 (38,2% FIBO of $1,2880-$ 1,4330).

The FTSE-100 has slipped a little in early trade Friday, still higher however, currently up 46pts (+1.1%). Oil stocks are offering some initial strength, as continuing problems in the Niger
Delta help push crude prices through $70/bbl. Mining stocks are also benefiting from similar strength in the metals markets, with Xstrata (XTA) leading gains.
FTSE +39.00 (+0.92%) at 4,291.57, CAC +17.39 (+0.55%) at 3,180.49, Dax +50.29 (+1.05%) at 4,850.85.

EUR/USD
Offers $1.4200, $1.4180, $1.4140/50, $1.4100/10, $1.4080
Bids $1.4025/20, $1.4000 , $1.3980, $1.3955/50

GBP/USD
Offers Y96.90/00, Y96.60, Y96.30/35
Bids Y95.50

The dollar fell, heading for its biggest weekly loss against the euro in a month, as Asian stocks rose for a third day and traders added to bets the Federal Reserve will keep interest rates low.The dollar declined against 12 of the 16 major currencies as Dallas Fed President Richard Fisher may today elaborate on the central bank’s statement this week that the benchmark rate will stay at “exceptionally low levels.” Australia’s dollar climbed for a fourth day against the greenback and the yen as commodity prices rose, encouraging demand for the nation’s assets. New Zealand’s dollar weakened after the government said its economy shrank at a faster pace. “Gains in stocks are pumping capital into markets,” said Masaki Fukui, a senior market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender by assets. “The recent risk aversion strengthened the dollar as a refuge but as risk appetite rebounds, higher- yielding currencies seem to be benefiting.”
The U.S. central bank held the target rate for overnight lending between banks in a range of zero to 0.25 percent for a fourth meeting on June 24. The Fed’s Fisher will speak at noon in Dallas. Traders see a 34 percent chance the U.S. central bank will increase its target rate by the end of the year, down from 50 percent odds a week ago, according to futures on the Chicago Board of Trade. The yen headed for a weekly decline against the euro as signs the global recession is waning increased speculation that Japanese employees will use their summer bonuses to buy higher- yielding assets abroad.
EUR/USD rallied about 150 pips during U.S. and Asian session as optimism on global economy increased. From yesterday's low at 1,3880 on early U.S. session, the Euro rose to levels above 1.4000 hitting 1.4060 Asian session high.

Japan's benchmark stock indices ended Friday's session higher, helped by continued hopes for a speedy global economic recovery. The Nikkei 225 was higher by 81.31 points, or 0.83%, to stand at 9877.39. The broader-based TOPIX was 7.03 points higher at 926.80.Volume for the Nikkei constituents totalled a preliminary 1.194 bln shares, with 163 issues trading higher, 50 lower and 12 unchanged.

EUR/USD $1.4000, $1.3870
USD/JPY Y95.35, Y96.30, Y96.35, Y95.00, Y97.00
EUR/JPY Y136.00
AUD/USD $0.8140
USD/CAD C$1.1530, C$1.1600

- 1Q private consumption unrevised at +0.2% q/q
- 1Q total investment revised to -2.4% q/q (-2.3%)
- 1Q inventory change impact on GDP -0.7 pt (-0.8 pt)
- 1Q foreign trade contribution to GDP -0.1 pt (-0.4 pt)

building on the solid overnight gains in the US and this morning in Asia. Spreadbetters Cantor Index are calling the FTSE up 27, the DAX up 17, the CAC up 20 and the Eurostoxx 50 up 12.

Resistance 3: Y97.80
Resistance 2: Y97.20
Resistance 1: Y96.50
Current price: Y95.90
Support 1: Y95.60
Support 2: Y94.80
Support 3: Y93.80
COMMENTS: Dollar tries again to rise with resistance comes at Y96.50. Stronger level is near Friday’s highs on Y97.20. Break above will open the way to Y97.80. Support comes at session lows on Y95.60. Below – at Y94.80 (Jun 23 lows). Break under will target May 22 lows on Y93.80.

The Hang Seng Index opens up 0.73% at 18,408.37.

Resistance 3:Chf1.1260
Resistance 2:Chf1.1150
Resistance 1:Chf1.1020
Current price: Chf 1.0912
Support 1:Chf1.0885
Support 2:Chf1.0820
Support 3:Chf1.0630
СOMMENTS: Dollar holds under session yesterday’s lows. Strong resistance comes near Wednesday’s highs on Chf1.1020 (also 38.2% Fibo of Chf1.1720 - Chf1.0590 decline). Above the bullish momentum strengthens and opens the way to Chf1.1150 (50%). Further resistance comes at May 18 highs. Support comes at Chf1.0885 (today’s low), stronger one – on Chf1.0820 50%) and Chf1.0630 (Wednesday’s low).

Resistance 3:$1.6800
Resistance 2:$1.6660
Resistance 1:$1.6600
Current price: $1.6419
Support 1: $1.6360
Support 2: $1.6210
Support 3: $1.6100
COMMENTS: Sterling set stable after yesterday’s growth. Resistance comes at highs on $1.6600/10, then – at $1.6660. Stronger level is around $1.6800 (50% Fibo of $2.0144 - $1.3470 decline). Minor support is at today's lows on $1.6360. Stronger support is near $1.6210 (Tuesday’s low).

Nikkei 225 opens up 0.58% at 9,952.92.Nikkei 225 ends midmorning up 0.24% at 9,819.29 on Friday.

Resistance 3:$1.4330
Resistance 2:$1.4270
Resistance 1:$1.4150
Current price: $1.4040
Support 1:$1.3980
Support 2:$1.3880
Support 3:$1.3780
COMMENTS: The euro continues growth.The nearest resistance $1.4137/50 (today's high),ahead of $1.4270. Stronger level is June 03 high on $1.4330.The nearest support - $1.3980 (today's low), below - $1.3880 (yesterday's's low). The strong level is located on $1.3780 (38,2% FIBO of $1,2880-$ 1,4330).

Change % Change Last
Nikkei +205.76 +2.2% 9,796.08
Topix +17.31 +1.9% 919.77
FTSE -27.41 -0.64% 4,252.57
CAC -21.66 -0.68% 3,163.10
Dax -35.45 -0.73% 4,800.56
Dow +172.54 +2.08% 8,472.40
NASDAQ +37.20 +2.08% 1,829.54
S&P +19.32 +2.14% 920.26
10yr Note -1.3900 -0.377% 3.546%
NYMEX Crude Oil +1.56 +2.27% 70.23
Gold +5.10 +0.55% 939.50

High Low Close
EUR/USD 1.4012 1.3888 1.3993
GBP/USD 1.6467 1.6231 1.6378
USD/JPY 96.56 95.60 95.97
USD/CHF 1.1016 1.0920 1.0931

EUR/JPY 134.80 133.28 134.33
EUR/GBP 0.8577 0.8474 0.8542
GBP/JPY 158.55 155.93 157.21
GBP/CHF 1.8051 1.7813 1.7905

06:00 Germany Import prices (May) 0.3% -0.8%
06:00 Germany Import prices (May) Y/Y -10.2% -8.6%
06:00 Germany Import prices excluding oil (May) Y/Y -3.4%
06:45 France GDP (Q1) final -1.2% -1.2%
06:45 France GDP (Q1) final Y/Y -3.2% -3.2%
06:50 France Consumer confidence (June) -39 -40
12:30 USA Personal income (May) 0.3% 0.5%
12:30 USA Personal spending (May) 0.4% -0.1%
12:30 USA PCE price index ex food, energy (May) 0.1% 0.3%
12:30 USA PCE price index ex food, energy (May) Y/Y 1.8% 1.9%
13:55 USA Michigan sentiment index (June) final 69.0 69.0
14:20 Germany CPI (June) preliminary 0.2% -0.1%
14:20 Germany CPI (June) preliminary Y/Y -0.1% 0.0%
14:20 Germany HICP (June) preliminary Y/Y -0.1% 0.0%